As life expectancy in the UK continues to increase, considerations need to be made about how to fund a good quality of life during retirement years. If you couple this with rising living costs, poor interest rates and other personal debts, equity release in retirement can be a great option for getting a pot of cash in the bank.

For many people their largest source of income can be tied up in their most valuable possession – their home.

If you have owned your home for a long time then it is likely that you have a substantial amount of equity in it, especially with increases in house prices over the decades.

Equity release is a tax-free way of freeing up that cash, enabling you to put it towards something else in your retirement.

If you choose to release the money you will still own your home until you die or go into long-term care.

It is most common to be able to release between 20% and 50% of the value you have in your property but this will depend on your mortgage lender and circumstances.

Your age, income, plans for the future and amount of income you want to release will all need to be considered before deciding whether equity release is the right option for you.

If you do decide to go ahead with the release, here are some options for what the cash could be used for:


Withdrawing cash may mean you are able to stop working earlier than planned and use it to top up your pension pot.

Home improvements

If you’re not going to down-size your home – perhaps it’s time for that new garden shed or kitchen?


Is it time to visit those far-flung places you’ve been dreaming about for years? You could make it a delayed gap year!

Mortgage and Debts

This is not the most exciting option, but it can be a sensible one if you want to pay off credit cards, car loans or any other outstanding debts you have.

Increase funds in the bank of mum and dad

The bank of mum and dad is more important than ever these days. With high house prices and stagnant salaries, your children might be struggling to get onto the property ladder themselves and would benefit from a little loan.

Money may also be needed to help pay university fees or for a wedding. Whatever the event, your children are sure to be very grateful.

The bank of mum and dad could also extend to the bank of grandma and grandad too.

You might want to give lump sums to grandchildren or to put money in trust or ISAs for them.

Other uses for the cash could include school fees, driving lessons or holidays.

Pay medical bills or in-home care

Unfortunately as we get older our health will deteriorate. The released money could be used to pay medical bills or for in-home care if required.

Reduce your family’s inheritance tax burden

If your estate is worth more than £325,000 and you want your family to avoid paying 40% tax you could give them a cash gift. You should take specialist advice on this.

Remember, if you die within seven years of giving the gift, your relatives will have to pay tax on it.

Use the Equity Release Calculator to work out how much cash you could release.

:: It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisers.